Experts calm Thai consumer fears over rising petrol prices

OIL EXPERTS say Thai consumers should not overreact to higher retail oil prices as they are expected to fall soon when the prices for crude drop.

Manoon Siriwan, an oil expert, yesterday told The Nation that Thai consumers should not worry much about a temporary oil price hike, as Saudi Arabia and Russia have signalled that they would increase oil production. The increase would be about 800,000 to 1 million barrels per day and it could bring down the price from an average US$75-76 per barrel currently to about US$70.

“Thai consumers are over-reacting and using it as an opportunity to attack the government,” Manoon said, referring to a social media campaign against PTT, Thailand’s largest energy firm, and the government, blaming them for letting the retail price climb too high. Some netizens have launched a campaign not to fill their cars with petrol at PTT gas stations.

They should understand that the government cannot control the oil price as it is part of a global market, and PTT’s sales of petrol and diesel are determined by market forces, he said.

The retail prices of petrol and diesel shot up by about Bt2.5 in the first 20 days of this month, which prompted the government to intervene in the market by placing a cap of Bt30 per litre for diesel on Thursday. The price of cooking gas will be lowered to Bt363 from Bt 395 per 15-kilogram tank, with effect from tomorrow.

Manoon also said that other key factors behind the price rise were tensions between the United States, Iran and Venezuela.

Praipol Koomsup, an economist specialising in energy policy, had the same view as Manoon, saying oil prices were expected to come down in the next few months. He backed the government policy to use state funds to subsidise diesel and cooking gas. The state Oil Fund has accumulated about Bt31 billion so the government has the resources to deal with the problem, said Praipol. At least the government could use the state fund for about eight to 10 months to subsidise energy prices, he said.

Praipol predicted that the crude oil price in the next one or two months could stay at around US$50-60 per barrel. In that instance, the government would not need to subsidise diesel price in the domestic market, he said.

AFP news agency reported that Russia and Saudi Arabia said on Friday that they believed a deal was possible to gradually boost oil output from as soon as July, as world oil prices had recently hit highs last seen in 2014.

Meanwhile President Vladimir Putin said on Friday that Moscow would be satisfied if the price of crude oil dropped to $60 per barrel, from the recent around $80.

Russia and Saudi Arabia are the key movers behind a pact between Oil and Petroleum Exporting Countries (Opec) and other producers, which has limited production since 2017 but which experts fear may soon lead to a hike in prices. Saudi Oil Minister Khaled al-Faleh said at an economic conference in Russia that a gradual output increase could happen in the second half of the year to prevent any supply shocks, according to RIA Novosti agency.

His Russian counterpart Alexander Novak said they had discussed whether they needed to ease production limits.